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BlackRock Review

Topic: Fund Manager Reviews 9 July 2019

  • 28.5% of BlackRock funds consistently outperformed at least half of their rivals over the recent 1, 3 & 5 years.
  • 25 of the 193 BlackRock funds analysed consistently performed worse than three-quarters of their peers.
  • The iShares Core S&P 500 UCITS ETF is the most popular iShares fund with UK investors. Over the past 5years this fund has returned growth of 112.35%.

In just over 30 years BlackRock has evolved from an eight-person startup to a Global giant that manages more assets than any other Investment manager. They generated more than £800 billion of net inflows this past 5 years and their total assets under management currently stand at £5.19 Trillion, which exceeds the size of Germany’s economy.

BlackRock’s rise to the largest Investment Manager in the World is remarkable, and through their range of funds, and that of their popular iShares brand, the amount of client assets they manage grew on average by £4.4 billion per week in 2018.

As a company, BlackRock have delivered huge growth, but how have their funds performed for their clients? In this report, we analyse the performance and sector ranking of 193 BlackRock funds and 726 iShares funds and identify which of their funds have performed the best and which have struggled.

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BlackRock Performance Summary

  • Of the 193 funds analysed 32.2% consistently performed worse than at least 50% of competing funds within the same sector.
  • The BlackRock Frontiers Investment Trust returned losses of -11.28% this past 12 months compared to the 0.73% sector average.
  • The £10.4 billion BlackRock Aquila Life US Equity Index Pension fund returned growth of 120.38% over the past 5years. This was more than any other BlackRock fund.
  • 38 of the 101 BlackRock pension funds with a performance rating consistently outperformed at least 75% of their peers..
  • Over the recent 5years the BlackRock Energy & Resources Income Trust returned losses of -13.62%.
  • 33% of BlackRock unit trust funds with a performance rating consistently outperformed at least 75% of their peers.

BlackRock Funds

Of the 193 BlackRock funds analysed, 8 could not be rated for performance as they have less than 1 years performance history. A further 31 funds were also unrated as they do not have a sector classification, and therefore their performance could not be compared alongside any other fund.

In total, 155 BlackRock funds were provided with a performance rating. These 155 funds were made up of 45 unit trust & OEIC funds, 8 Investment Trusts and 101 Pension funds.

BlackRock overall fund rating

BlackRock Emerging Markets

The BlackRock Emerging Markets fund has consistently been one of BlackRock’s top performing funds. This Fund invests primarily in the equity securities (e.g. shares) of companies incorporated or listed on a stock exchange in emerging market countries (countries listed in the MSCI Emerging Markets Index).

As an emerging market fund it assumes a higher degree of risk in the pursuit of higher returns. Over the recent 5 year period it has managed to return growth of 56.32%, which ranked 18th out of 80 emerging market funds.

BlackRock UK Fund

The BlackRock UK fund is classified within the IA UK All Companies sector alongside 230 competing funds with 5 years performance history. Funds in this sector must invest at least 80% of their assets in UK Equities with a primary objective of achieving capital growth. This funds top 10 holdings include Rightmove, Tesco, Unilever and Diageo. Over the past 5 years this fund has consistently been one of the top performing funds in its sector and has returned growth of 48.32%, ranking 28 out of 231 funds.

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BlackRock Corporate Bond

The BlackRock Corporate Bond fund is a relatively low risk fund that invests principally in fixed income securities and money-market instruments, which may include investments with a relatively low credit rating or which are unrated. This fund currently manages just over £1 billion of client money and over the past 1, 3 & 5 years it has continually outperformed at least 75% of its competitors and delivered returns of 4.77%, 16.63% and 28.68%, each of which were comfortably above the sector average.

BlackRock US Opportunities

The BlackRock US Opportunities Fund invests primarily in equity securities ( shares) of medium and smaller companies which are incorporated or listed on U.S stock exchanges. The North American sector has been one of the biggest earners for investors in recent years with funds such as the Baillie Gifford American returning growth of 104.94% and 170.95% over the recent 3 & 5 years, and with funds in this sector averaging returns of 56.87% and 96.6%. However, the BlackRock US Opportunities fund was unable to get close to these figures and over the last 3 & 5 years generated growth of 40.95% and 73.32%, ranking the fund among the lowest in the entire sector.

BlackRock Gold & General

The BlackRock Gold and General fund manages client assets of £840 million. This specialist fund invests primarily in companies which derive a significant proportion of their income from gold mining or commodities such as precious metals. Over the recent 1, 3 & 5 years this funds returned growth of 0.38%, 5.19% and 25.85%, which was consistently lower than the sector average of 2.18%, 36.18%, and 38.59%.

Of the 45 BlackRock unit trust & OEIC funds analysed 53% received a poor 1/2 star performance rating as their returns were lower than at least half of their peers. 35.5% of their funds received a 4/ 5star performance rating as they have consistently outperformed the majority of their competitors.

BlackRock unit trust fund rating

BlackRock Pension Funds

From the 101 BlackRock pension funds analysed 38 have consistently outperformed at least half of their peers - 15 of which consistently outperformed at least three-quarters.

BlackRock Aquila Life US Equity Index Pn

The BlackRock Aquila Life US Equity Index Pension fund has continually been one of the best performing pension funds in the North American Equities sector over the past 5 years. This fund is also BlackRock’s largest pension fund with assets under management exceeding £10.3 billion. Over the past 1, 3 & 5 years this fund returned growth of 11.03%, 63.80% and 112.94%, much higher than the sector averages.

BlackRock Aquila Life Consensus Pn

Another top performing BlackRock pension fund was their Aquila Life Consensus fund. This fund manages £6.6 billion of client money. It invests in the shares of UK companies and aims to achieve returns that are consistent with the return of the FTSE All-Share Index. Over the recent 1, 3 & 5 years this fund returned growth of 2.94%, 32.60% and 44.34%, whereas the average returns for this funds sector over the same period was 0.79%, 26.26% and 34.56%.

BlackRock Aquila Life Japanese Equity index Pn

The BlackRock Aquila Life Japanese Equity Index Pension fund invests in the shares of Japanese companies such as Toyota, Sony & Honda and aims to achieve a return that is consistent with the return of the FTSE All-World Japan Index. Over the periods analysed this fund has consistently been one of the top performing funds in the Japan Equities sector. This fund returned 5 year growth of 75.75%, which was better than 84% of competing funds within the same sector.

BlackRock Aquila Connect Long Term Pn

This fund invests in equities of the UK and overseas markets, with approximately 60% in the UK and 40% overseas. The fund currently manages client assets of £818 million and it is classified within the competitive Global Equities sector. Over the recent 1, 3 & 5 years this fund has returned growth that was below the sector average and consistently lower than at least 50% of funds within the Global Equities sector.

BlackRock Aquila Connect (70:30) Global Equity Pn

Launched in 2002, the BlackRock Aquila Connect (70:30) Global Equity pension fund manages a relatively small £77 million of client assets. Similar to the Aquila Connect Long Term pension fund this fund also sits within the Global Equities sector where it has also struggled for performance. Over the past 5 years this fund returned growth of 42.39%, which was well below the 58.28% sector average and lower than 78% of funds within the Global Equities sector.

BlackRock pension fund rating

BlackRock Investment Trusts

BlackRock manage 9 investment trusts, which combined manage more than £2 billion of client assets. From these 9 trusts, the BlackRock Throgmorton Trust delivered the highest returns over the recent 5years.

BlackRock Throgmorton Trust

The BlackRock Throgmorton Trust PLC has total assets of £422 million. The trust invests primarily in UK smaller companies that trade on the London stock exchange and it is classified within the IT UK Smaller Companies sector alongside 17 other investment trusts with similar objectives. Over the past 3 & 5years the Throgmorton trust has managed to return growth of 69.97% and 100.90% which was the highest of all 17 other trusts in its sector.

BlackRock Smaller Companies Trust

Similar to the Throgmorton trust the BlackRock Smaller Companies Trust invests primarily in UK smaller companies and is classified within the IT UK Smaller Companies sector. This trust has also consistently enjoyed strong returns which although not quite t the level of Throgmorton they were still among the highest in its sector.

BlackRock Frontiers Investment Trust

The Company’s investment objective is to achieve long term capital growth by investing in companies domiciled or listed in or exercising the predominant part of their economic activity in, less developed countries. As such, it is classified within the Global Emerging Markets sector where it has struggled to deliver the same level of returns of its competitors.

Over the past 5years this fund returned growth of 32.93% which was below the 38.84% sector average and the 9th lowest of all 11 trusts in the same sector.

BlackRock Energy and Resources Income Trust

Over the past 5years the BlackRock Energy and Resources Income Trust has had the worst returns of all BlackRock funds analysed for this report. This trust aims to achieve an annual dividend target and, over the long term, capital growth by investing primarily in securities of companies operating in the mining and energy sectors. However, this past 5years it has returned losses of -13.62%.

Blackrock North American Income Trust

The Blackrock North American Income Trust aims to provide an attractive and growing level of income return with capital appreciation over the long-term, predominantly through investment in a diversified portfolio of primarily large-cap U.S. equities. This trust has consistently delivered strong performance with returns over the past 1, 3 & 5years of 10.37%, 57.55% and 97.33%.

Of the 9 BlackRock Investment Trusts analysed, 7 delivered positive growth returns with 2 returning losses over the past 5years.

BlackRock investment trust rating

iShares ETF

In June 2009, BlackRock took a giant step toward becoming the world's largest asset manager, announcing it would acquire Barclays Global Investors for around £10.6 billion.

The deal came in the early aftermath of the great financial crisis and shocked many within the global investment industry. At the time, Barclays rejected a government bailout instead choosing to sell off their fast-growing iShares ETF unit.

When the deal closed on 1st December 2009, BlackRock more than doubled its worldwide assets under management to about £2.62 trillion from £1.15 trillion and became the world's largest asset manager.

The 2009 deal more than doubled BlackRock’s assets under management and has proved hugely valuable with iShares now managing more than £1.36 trillion in assets, which according to the company’s year end report, accounted for 29% of BlackRock’s total assets under management at the end of 2018.

iShares is the world’s largest ETF provider, with more than 700 ETFs globally. According to BlackRock there is plenty of potential for growth as they predict the global ETF market will more than double by the end of 2023.

iShares Review

When BlackRock bought over iShares the financial crisis had created an environment that helped the rise of exchange-traded funds (ETFs) and low-fee investing. In the 10 years since, iShares has established itself as the frontrunner in the ETF market, with their ever-expanding range of funds generating inflows of £133 billion in 2018 alone.

The iShares range of funds is among the most popular in the World but how have they performed for investors; and how do they compare to their competitors?

We analysed the performance and sector ranking for 726 iShares funds and identified that 52.2% have performed worse than at least half of their competitors during the recent 5 year period.

iShares performance summary

iShares Performance

Of the 726 iShares funds analysed 47 received a 5 star performance rating. These 47 funds consistently outperformed at least three-quarters of same sector funds during the past 1, 3 & 5year periods.

iShares Core Russell US Growth ETF

The iShares Core Russell US Growth ETF was among their top performers. This ETF seeks to track the investment results of an index composed of a large- and mid – capitalization U.S. equities that exhibit growth characteristics. This US fund currently manages in excess of £5.2 billion of client assets and over the past 1, 3 & 5years it has returned growth of 13.48%, 76.29% and 137.99%. Each of these returns were better than at least 75% of competitors and comfortably higher than the 7.08%, 49.84% and 91.49% sector average.

iShares Core S&P 500 UCITS ETF

Since its launch in May 2009 the iShares Core S&P 500 UCITS ETF has grown to manage more than £25.5 billion of client assets. The Fund seeks to track the performance of an index composed of 500 large cap U.S. companies. Over the past 1, 3 & 5years this fund has returned growth of 11.08%, 63.13% and 112.35%, which although above the sector average they were each well below the sectors top performers.

iShares Core MSCI World UCITS ETF

The iShares Core MSCI World UCITS ETF seeks to track the performance of an index composed of companies from developed countries. It launched in September 2009 it currently manages client assets of £15.1 billion. This fund has had moderate performance over the recent 12 months with returns of 6.49% ranking 56th out of 178 funds in its sector. However, over 3 & 5 years it has been one of the best performers in its sector with growth of 51.53% and 77.91% respectively.

iShares Physical Gold ETC

The iShares Physical Gold ETC seeks to track the return of the gold spot price. This fund is another popular fund with UK investors and it currently manages £3.5 billion of client money. This fund sits within the cluttered Global ETF Commodity & Energy sector with 553 competing funds. Over the past 12 months this fund has managed to return growth of 3.44%, which ranked 131st in its sector and over 5years it has delivered cumulative returns of 34.75%, which was better than 75% of competing same sector funds.

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iShares Global Government Bond UCITS ETF

The Fund seeks to track the performance of an index composed of local currency bonds issued by governments of developed countries. Since its launch in March 2009, the iShares Global Government Bond UCITS ETF has grown to manage in excess of £1.1 billion of client assets. Although a popular choice, this ETF has struggled to generate a similar level of growth to that of its peers. Over the recent 5years this fund returned growth of 36.99%.

However, the Vanguard Total International Bond Index, which sits within the same sector, returned growth of 62.37%

BlackRock Ethical Investing

In 2017, BlackRock expanded its presence in sustainable investing and environmental, social and corporate governance (ESG) with new staff and products both in USA and Europe with the aim to lead the evolution of the financial sector in this regard.

However, in May 2019, BlackRock received widespread criticism for the environmental impact of its holdings. It is counted among the top three shareholders in every oil “supermajor” except Total, and is among the top 10 shareholders in seven of the 10 biggest coal producers. In its 2018 annual letter to shareholders, chief executive Larry Fink said that his overriding duty is to make customers money, whatever the environmental consequences.

BlackRock Review

BlackRock’s acquisition of iShares has helped them to lead the way in the growth of low cost ETFs, and their global growth strategy has seen them become the largest asset manager in the World with more than £5.19 trillion of client assets under their management.

However, many of their funds have consistently underperformed when compared to their peers, with other fund managers delivering better returns from their range of investment products.

Although underperformance has impacted many of their funds, our analysis also identifies some stellar performance from a proportion of BlackRock funds, which combined with their low cost, make them some of the most attractive investment opportunities for investors.

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